Southwest Airlines Co <LUV.N> Chief Executive Gary Kelly said on Wednesday he does not expect the airline will be profitable in 2020 amid the coronavirus pandemic, snapping a 47-year streak of posting consecutive full-year profits.
āAs long as the case counts are high, I think that we have to expect that travel will be relatively modest,ā Kelly said at a Texas Tribune event. āWeāre continuing to see traffic and revenues down 75% versus a year ago today and to think that would recover to the point we would be profitable I just think is unrealistic.ā
The company last month posted a $915 million loss for the second quarter. Kelly said it is still burning through about $20 million a day.
āWeāre still losing cash every single day,ā he said. āWeāve got a long way to go before we can feel like we are out of intensive care.ā
Southwestās has cut its scheduled flights by about 35% to 40%, Kelly added. āThe airlines are less full,ā Kelly said, noting the airline was not booking middle seats.
Nearly 17,000 Southwest employees have agreed to voluntary long-term leaves or exit packages.
āThe solution here is to get our passengers back ā not to try to shrink the airline so radically that weāre prepared for a very, very modest travel environment,ā Kelly said.
Southwest shares Wednesday closed largely unchanged.
Earlier, Southwest, Ryanair Holdings Plc <RYA.I> and EasyJet Plc <EZJ.L> were the only three airlines whose bonds are still rated investment grade, S&P Global Ratings said, while estimating a drop of up to 70% in global air passenger traffic for 2020.
Carriers operating long-haul international flights including American Airlines <AAL.O>, United Airlines <UAL.O> and Delta Air Lines <DAL.N> have been among the worst hit due to the pandemic.
S&Pās forecast for 2020 global passenger traffic has worsened to a drop of between 60% and 70% from between 50% and 55% estimated in May.
(Reporting by Sanjana Shivdas in Bengaluru and David Shepardson in Washington; Editing by Anil DāSilva and Tom Brown)